Confidence: That was the word Kinaxis CEO John Sicard used repeatedly during the firm’s year-end earnings conference call, in which the Ottawa-based supply chain software supplier recorded its 15th consecutive quarter of revenue growth.
Sicard said Kinaxis (TSX:KXS) is translating that confidence into new investments that will see the company’s sales team grow by 40 per cent this year, with specific weighting in target markets of Asia and Europe.
Some of Sicard’s reasons for confidence can be found in the firm’s continual quarterly revenue growth since going public in 2014. Revenues for this past year were $133 million, up from $116 million in 2016, and net profit nearly doubled to $20.4 million from $10.7 million the year before. (All figures in USD.)
OBJ360 (Sponsored)
SnowBall: A Cool Winter’s Eve to Keep Ottawa Kids Warm This Winter
As Ottawa’s winter chill sets in, the warmth of community spirit takes centre stage at SnowBall: A Cool Winter’s Eve, The Snowsuit Fund’s sought-after gala happening at the Ottawa Art
93 Norman offers convenience, comfort, and community in Ottawa
With easy access to some of Ottawa’s best restaurants, miles of bike paths and a modern, brand-new living space, Taggart Realty Management is adding to the city’s rental accommodation inventory
Subscriptions made up 76 per cent of total revenue in 2017, up 23 per cent year-over-year to roughly $100 million.
Alternatively, take a look at the major customer signings Kinaxis had in 2017: Standouts include Japanese automakers Nissan and, more recently, Toyota. Automotive, alongside consumer-packaged goods and life sciences, are three of the firm’s strongest verticals.
Two factors are driving Kinaxis’ global success. The first is the solution itself: software that provides concurrent supply chain planning.
The system, which Sicard called a “self-healing supply chain” during the call, makes use of real-time data to update suppliers on expected performance and helps them to find quick solutions when interruptions inevitably arise.
In response to an analyst’s question about competitors dropping prices to box Kinaxis out of the market, Sicard asserted the quality of the product as the selling point that would win out.
“Our prospects are looking for a cure, not a placebo,” he told the analyst. Concurrent supply planning, he said, is that cure.
The other contributor is Kinaxis’ growing network of partner resellers. The “vast majority” of new customer activity is influenced by that partner network, Sicard said, and the coming investment to the in-house sales team is meant to amplify these results. Kinaxis’ teams work “hand in glove” with partners to win those deals, he said.
“Now is the time to accelerate our investments in sales and marketing,” Sicard said. “My confidence in our future remains very high.”
Accordingly, Kinaxis has set its revenue guidance for fiscal 2018 between $158 million and $163 million.
Investors, however, don’t appear to share all of Sicard’s confidence. Shares of Kinaxis were down 3.1 per cent, or C$2.68, to C$84.25 on the Toronto Stock Exchange on Thursday.
